Firms see Green IT as good for bottom line too

Roy Choudhury Business Times 21 Jan 08;

IDC survey shows 82% of local firms invest in Green IT for cost benefit, writes AMIT ROY CHOUDHURY

BEING Green is not only good for the environment, it is also good for the bottom line; and going by a new study, corporate managers in Singapore understand this very well.

The study by research agency IDC finds that cost considerations are driving corporations here to invest heavily in environmentally friendly IT infrastructure, or Green IT.

IDC reports that 82 per cent of local firms have cited cost savings as the primary driver for investment in Green IT, as compared to 75 per cent in the Asia-Pacific, excluding Japan, (APEJ).

Speaking to BizIT, IDC's Philip Carter noted that green technology will definitely have an impact on the bottom line of companies.

'Good corporate citizenship plays less of a role currently in the preference for Green IT in Singapore,' he commented.

Mr Carter, who is the Asia-Pacific head of IDC's Green IT practice, added that as the concept of sustainability becomes more prominent in the market in the future, the role of good corporate citizenship will become more important.

The IDC survey noted that 22 per cent of companies in Singapore think green infrastructure is an important element in their corporate planning. 'This is expected to go up to 45 per cent a few years down the road,' Mr Carter said.

Not only are companies becoming aware of the need to have green infrastructure in-house, they are getting to the stage when they will also expect their suppliers to be green compliant.

'It's becoming clear across the board that end-users will be expecting vendors to take more responsibility in terms of bringing 'Green' products and services to market as well as improving their own internal 'Green' operations and practices in the future,' the IDC official noted.

The survey notes that 15 per cent of Singaporean companies are already considering the Green compliance of their suppliers. This will go up to 46 per cent within a few years.

Moreover, 19 per cent of Singaporean companies are looking to incorporate Green requirements in their request for proposals (RFPs). Mr Carter added that 22 per cent of Singaporean companies are taking a very hard look at Green policies.

Interestingly, the IDC study shows that in Japan, 52 per cent of the companies surveyed have indicated that Green requirements are a part of their procurement process.

Mr Carter noted that one of the reasons why the Green initiative in Singapore was relatively less developed was due to the lack of education on the topic as well as too many confusing messages from the vendor community.

While the government should take the lead role from an adoption perspective, it also has a major role to play in terms of regulation across the various areas within Green IT, Mr Carter noted.

'We see governments increasingly playing a key role here in the region by way of introducing regulations for energy efficiency and e-waste to expedite organisations down this path.'

He suggests that a good starting point for companies in their Green IT journey would be an assessment of their IT infrastructure, mainly focusing on energy efficiency.

That would mean investigating the benefits of technologies like virtualisation, and blade servers, with a view to cutting the electricity bill.

'In most cases, the first phase of the adoption of Green IT will be about 'Lean IT' - focusing on improving energy efficiency of IT equipment within the data centre to reduce costs in the face of rising electricity costs,' Mr Carter noted.

Initiatives like recycling, e-waste guidelines and paper management, which are perceived to have less of an impact on the bottom line, will not be focal points until sustainability is accepted as part of standard business practice.

'In emerging economies of APEJ, it is very clear that cost savings is the primary driver for investment in Green IT, while the more developed economies like Australia, New Zealand and Japan are beginning to understand that corporate social responsibility will increasingly play a key role as the focus on sustainability becomes more prevalent,' the IDC analyst said.

However, the fact remains that the majority of the organisations do not currently have a Green policy within their IT departments in place, which means that putting 'Green' into practice has not moved into mainstream yet.

'Hence, the key takeaway for vendors is the need to ensure that they are making a business case for Green IT in the context of reducing cost in the short term,' Mr Carter said.

He added that further down the line, as governments become more active in terms of regulating this area, IDC expects the broader notions of corporate social responsibility and sustainability to become increasingly important and drive both growth and financial benefits in this market.